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tv   On the Move With Rishaad Salamat  Bloomberg  January 11, 2015 8:00pm-10:01pm EST

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>> good morning. i'm rishaad salamat live from hong kong. this is "on the move." the hang seng index heading for a rally after an overhaul of two major constituents. sri lanka is new president takes aim at the past. and, our american drivers ready for made in china? although about to test the water. the latest on japan, we have one eye on the hong kong open.
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john dawson is having a look at what is going on for the nikkei. what is really driving sentiment? >> we are seeing one of the biggest gainers driving that. looking for direction from the fed with regards to quantitative easing. central banks really directing the money. taiwan, malaysia, you see both waiting to open. we are also watching for the opening of hong kong. very important, the stock story of the day is li ka-shing's empire. he goes back to the top of the rich list. he is having chung ka holdings incorporated. this, prices on friday.
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friday in the u.s., -- when they open today, we will be following this. these stocks will rise. not my words, the investors. those are the three stocks to follow. [indiscernible] opening for australia, it is really quite interesting. financials, tech, consumer goods, all rise. overall, that is the impact today on australia. clearly, the chinese open and also the hong kong story. >> thanks for that. we are watching this with zeb at the moment.
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li ka-shing's shakeup with two hong kong companies. he was saying hong kong needs to go on the path to reform now he is going to move his stuff overseas. >> this has them scratching their heads in hong kong talking about the future. this is a company that has been tied to hong kong history. it is a company that is changing. li ka-shing with a $24 billion restructuring is moving markets already. we will get that in just a moment when trading begins. we have cheung kong as well as hutchison port being split in half. it is really a move to unlock the value in the companies, to separate their focus. things like aircraft, a business they entered into earlier in the
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fall to the tune of $1.5 billion. >> this has been happening for a wild. just on the back burner. what is the back story? >> we are hearing from cheung kong executives getting some inside track on how this all came together. there has been a push from shareholders to see more transparency, to see cheung kong invest that money in better ways. you saw them making this investment into aircraft. that is what led to these changes. we heard from executives late friday. >> if you have two separate companies side-by-side, both controlled by li family, and any shareholder owning shares in each of the companies will be investing directly together with the chairman. to use the words they say
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there's no more concubines. >> it is a complex dear. -- complex deal. >> exactly. an absolute ramp up there. there we go. 10% up for both of them. >> if we are lucky to see that filtered through and have impact on the hang seng these companies account for over 4% of that index. >> absolutely. let's check on some of the other stories we are following today. hopes are rising that the flight recorders from the crashed air asia plane have been located. searchers say pings from the black boxes have been heard. nearby, another large piece of wreckage has been spotted. all 162 people on board died when the plane crashed two weeks ago. >> we can confirm that we have
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detected 10 signals from the black box. the recorder itself has not been found yet. i repeat, the black box has not been found yet. >> over in europe, more than one million people and dozens of world leaders marched through paris to remember the victims of the "charlie hebdo" attack. president hollande said paris is the central of the world at the moment. elsewhere in france and across europe as well, the suspected gunemn gave interviews before the attack saying they were acting on behalf of al qaeda in yemen. the new sri lankan president is making waves barely two days into the job. he says he will root out corruption and nepotism. he also says he is going to roll back harsh censorship laws.
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he is also investigating claims against the previous president. let's get all these different strands together. haslinda amin. where does this begin? >> let's start with coup allegations. they are trying to see if running a pox a tried to stage -- rajapaksa tried to stage a coup. it is believed that the army, the police, the attorney general opposed the plan. that apparently happened thursday at midnight. behind the scenes an attempted coup, but on the surface rajapaksa conceded defeat. the new government will probe that. we are also getting reports that he is expected to kill a casino project involving billionaire james packer.
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it was supposed to be a $400 million casino and hotel. the new president is seen as a social conservative. the manifesto released by his government doesn't allow for casinos. he is already making huge waves. >> we are expecting a new government to be named soon. . >> he is putting the final touches to his new government. robbie -- ravi karunanayake -- [indiscernible] a parliamentarian is also being considered. sirisena has said it will be a scaled-down cabinet.
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he urged all members of parliament to join him to form an all party government to work for the country's development, hoping to restore good governance. he says he wants to rest your the role -- restore the rule of law. he's got to coordinate all of them. big challenges lay ahead for the new president. >> thank you very much indeed for that. haslinda amin joining us there from singapore with the latest on what is happening in sri lanka. still to come, a look at the china market. valuations are still not excessive. ♪
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>> let's have a look at the stories we are tracking for you this week. on hang kong -- on wednesday the hong kong chief executive giving an address. [indiscernible] occupy hong kong campaigners have promised to demonstrate outside. millions will pack the streets when the pope visits this week as well. the philippines is asia's only catholic nation. also on thursday, xiaomi expected to lift the covers on its new flagship product. mystery surrounds the release with the company refusing to say what this product actually does. is it another new smart phone or an electronic device? all will be revealed. on friday hyundai's long
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simmering pay dispute goes to court. unions have carried out partial strikes and threatened more action. let's have a look at what 2015 does hold. let's look at the market with jason. he joins us now from singapore. thank you for coming on the program. what do you think is going to be driving things? despite the recent rally, chinese equities still have attractive valuations. >> if you look at the chinese equities -- [indiscernible] i think chinese equities are not trading at excessive valuations. if you look at the hsci you do not have excessive valuations.
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of course, there is continued monetary easing and loosening of policies in china. that will help the market. potential you could have -- [indiscernible] that could be a positive boost for the equity markets. we always say that we prefer asia over the last few months. there was a 53% surge in shanghai last year. if you look at -- [indiscernible] this index right now, asia is about a 30% premium. >> tell me what is going to trigger that premium to be eroded? >> if you take a look at the current situation in asia there
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is a lot of reauthorization because 50% of the market transactions in the asia market -- there was some risk. we do not rule out a short-term reaction in the market. some of the market indices are trading at quite excessive valuations within the a-share market. if we lose some sentiment given that the a-share market is more sentiment-driven, -- [indiscernible] >> isn't the relation here that a-share trading is dominated by the retail investors whereas institutional investors look at h ones? >> that is correct. if you look at the h-share index, it is 50% owned by institutional investors while a-share market is owned by
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retail investors. the h-share market is trading at more decent value compared to a-shares which are more sentiment-driven. right now, you would buy h-shares instead of a-shares. >> jason, let's look at what has changed from 2014. one thing for certain is this oil slump has continued. how much support is that giving to global equities? >> if you look at oil prices, in terms of support i don't think it is immediate. if you look at oil prices there was an immediate negative effect. a decline in oil prices will bring about an immediate decline in oil and gas stocks in s&p 500. energy stocks make up about 8% of s&p 500 market cap and 11% of
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earnings. a lower oil prices actually a negative. if you look longer-term, it could be a positive, given that lower oil prices will lead to consumer sentiment increase over medium term. >> ok i think the biggest beneficiary in terms of the economies of the world is the united states when it comes to the oil price. does that have any read through for interest rates? >> if you look at last friday's data, the unemployment data came in better than expected, 5.6%. nonfarm payrolls coming above 200. that is positive for the u.s. economy. the u.s. economy is recovering in terms of the labor market.
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one where he is -- one worry is the lack of wage growth. we still see the rate hikes come in the second half of 2015. >> jason, thank you very much indeed. right, we've got to take a break. all the action in the hong kong market. good li ka-shing reclaim his spot as the asia-pacific's richest man? ♪
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>> nine minutes to go before things get underway good and proper in hong kong. this is the premarket update. futures indicating a strong rise in the trading day. one company we are watching out for is those owned by li ka-shing. let's get more on that. some wealth creation here for already a very wealthy man. >> going to be a good start to the day if you are li ka-shing. cheung kong holdings and hutchinson, the flagship companies that he's shaking up in an overhaul $24 billion shakeup. look at the initial indications. this is the premarket trade. hutchinson and cheung kong up in the order of 15%.
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these are levels we haven't seen in quite some time. we will get you the historical perspective very shortly. this is an indication that we will see a powerful market today that will drive the hang seng index already up 198 points. watch the gains. cheung kong and li ka-shing, it goes without saying, one of the most prominent businessmen in asia. this is a major overhaul of the business, one that investors have been calling on for quite some time. as far as the historical perspective, this is the biggest gain since 1997 for hutchison whampoa. >> thanks a lot for that, zeb eckert. five years after haiti was devastated by an earthquake, the nation is still struggling to get back on its feet. it takes more than bricks and mortar.
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for new york designer donna karan, it is about showing people how to exploit creative potential. >> donna karan, the new york fashion designer credited with revolutionizing womenswear in the 1980's, may seem an unlikely spokesperson for haiti. but karan has been developing talent in haiti since just after the devastating earthquake. >> i need to get involved in showing haiti in a way that is special. i work with the haitian designers. i develop designs with them. i show them to the public getting them interested. >> through her foundation karan helps haitian artists reach the global marketplace. >> women, men, who is making this? >> we work with a lot of women but i am not discarding the men. giving a man a fishing pole is as important as to women. >> karan has worked with 200
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haitian craftsmen and women who make everything from chandeliers to necklaces. >> these are recycled cereal boxes. >> i thought they were shells. >> in 2011, karan began working with paula cole. >> the bags are completely handmade. >> kaweran's urban zen cells handbags around the world. the bags from made from t-shirts will retail for about $200. >> it is not going to go on markdown. in the retail world, you could be in one season, out the next. that is not what can happen to haiti. >> how hard is it for you to get these amazing products out of that island and on tower shelves? >> not hard. not hard at all.
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that has not been my problem. >> doing business in haiti has its challenges. much of the workforce lacks education. electricity is unreliable and expensive. >> you know the bumps in the road? [laughter] those are bumps in the road. we hit them. we are not giving up on haiti. >> we've had park geun-hye, the south korean president, talking, urging family reunions around the lunar new year. also, saying the north should start talks, to come forward for these talks. also talking about the economy, saying the property market needs to recover. saying also that things are improving when it comes to the property market in south korea as well. park geun-hye talking about the
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north and south coming together and talking and having better ties. it is now even easier to stay in touch with us here on "on the move." you can follow me and my colleague, angie too. also, everything you do here, you can also get it at bloomberg tv as well. just to tell you what we've got coming up, volcvp looks to shake up the u.s. auto market. details coming up. it is also the start of the trading week in hong kong and shanghai. we got the opening numbers. ♪
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i'm thinking roast beef. want to get lunch? get the fastest wifi hotspots and more coverage on the go than any other provider. xfinity, the future of awesome. >> headed back on top in asia. li ka-shing's flagship companies surging in hong kong. made in china, sold in the states. volvo plans to turn up the heat on detroit. and paying the price. the cost of unifying the korean peninsula. let's get over to the big story, the reaction to li ka-shing's reshuffle for the free market. cheung kong holdings up over 15%. >> that is a $24 billion
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reshuffle. basically, cheung kong will swallow up hutchison one polar. look at the opening prices. cheung kong holdings, the biggest gain since 2008. hutchison's against gain since 1997. the rest of li ka-shing's empire up. those are the stocks that are really worth following in hong kong. also ubs have added these two to their most preferred hong kong stocks list. as you can see, the stocks rallying today on that news. let's go to the chart. [indiscernible] look at that, dramatic gains. [indiscernible] that is for hutchison went cola.
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significant gains. japan is closed for coming of age day. japan is shut for the day. therefore, all direction will be coming from hong kong. australia, financials are 0.6% driven by real estate. li ka-shing is the reason for that. six stocks are rising. cheung kong holdings, and of course in the wind tunnel of that, we have the key other ones. the reason they are rising so much is because of cheung kong holdings. if you go back to investment trust, you see that one stock is rising.
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back to the middle, financials banks financial services also seeing gains. two stocks, hutchison went whampoa and cheung kong holdings, that is the big story of the day. when you look at the hong kong open today shanghai and hong kong, the impact, you can see. hong kong is open the most. cheung kong holdings, hutchison driving those higher. japan is closed for the day but hong kong is higher. [indiscernible] china is down by 1% at the open. li ka-shing's reshuffle, $24 billion. that is the impact, up 18% each
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for the stocks. >> with those gains as john was mentioning for hutchison and cheung kong, we are seeing billions more being added to the net worth of li ka-shing. let's get more. here is our "bloomberg billionaires" reporter. >> he is definitely number one. last time i checked, he was a very close number two. 20%, that is amazing news. he is number 1, 5 billion. >> we did see jack ma from ali baba overtake li ka-shing last year. where does that leave him? >> he could well make a comeback. that all depends on where alibaba is trading. his majority of wealth is coming from that one single stock. you might see that happen. >> who are the other contenders? >> the other interesting person to watch he owns a real estate
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company just listed in hong kong. they did an ipo last year if i remember correctly. his wealth is $25.2 billion. >> you talked to li ka-shing when jack ma had overtaken him. what did he say? >> he gave us a very interesting quote. he said, i'm nothing but happy when young people from china do well. i thought that was a brilliant quote. he is 77 right now and jack is 51. he could be jack's father in terms of ages. i thought that was a very interesting -- >> what do you think he is going to say now that he has overtaken jack ma? >> i'm very curious to find out myself. >> thank you very much for that. this company we were reporting this on friday.
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investors wait for a new announcement from the company. this company was in danger of default thing. bondholders haven't received payment. that is according to people familiar with this. kaisa bondholders still haven't received that payment. the shares are still suspended here as well. let's get more on that story. let's look at one story that is developing. the korean president holding her annual new year's conference. she said that her government would focus on the economy would also seek a new engine of growth. she also spoke about north korea, saying pyongyang should resume family reunions. [indiscernible] and indeed talk about the cost of reunification. david ingles has been adding up the figures and looking at the
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enormous cost of unifying the korean peninsula. >> the two koreas have technically been at war since 1953. let's imagine they put their issues aside and pursued unification. how much would it cost to put them back together? let's look at the most recent operable transaction, the one between east and west germany. the bill for rebuilding the country cost the west about $2 trillion. when the wall fell, the west german economy was about 10 times the size of the east. that is where the problem lies when we consider korea the lack of reliable information. we don't know a whole lot about the north. pyongyang has an released official gdp data since 1965. the best estimate is from the south korean central bank, which puts its northern neighbor's economy at about $30 billion, making the south about 50 times larger. how much would it cost?
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just to show you how much in the dark everybody is estimates range from $50 billion to more than $3 trillion. the financial services commission put out an estimate of $500 billion to be spent over 20 years. even the chief admits he is embarrassed about how unreliable their calculations are. while he can barely make a rough estimate, we do know it won't be cheap and it won't be simple. south korea's 50 million people enjoy one of the world's highest living standards. many of the north's 24 million suffer from malnutrition and all-powerful oppression. despite the uncertainty and instabilities of the future, the countries are actually hugely complementary. south korea's president described it as an economic bonanza. imagine what you could get if you combined the capital and skills of the south and the labor and natural resources of
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the north. on paper, it is a great idea. until we have a lot more light from the north star, all this is at best simply a guesstimate. >> david ingles on the cost of reunification of the korean peninsula. let's have a look at some of the other stories making headlines. here is shery ahn. >> hondas president will be a no-show at the detroit auto show this week, despite the debut of the new supercar. he is regarded as the father of the 1990's original nsx but he has chosen not to go to detroit for this year's show. experts say he is probably keeping a low profile following the faulty airbags that have been linked to at least five deaths in honda cars. the slowdown in china is hitting the auto sector. car sales grew at a slower pace last year, rising only 10%
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compared to 17% in 2013. china's push to curb pollution and traffic led to weaker demand. but it is a different story for vw in china. the company celebrating a milestone, saying the company delivered more than 10 million vehicles for the first time last year. that is four years earlier than expected. deliveries to china and hong kong rose more than 12%. the chief executive said vw is making good progress improving profitability and customer satisfaction. those are your top corporate headlines. >> volvo is poised to become the first major automaker to export chinese cars to the united states. it is fair to say that chinese made cars have a checkered past. >> i'll believe it when i see it. if anybody can do it, volvo.
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>> it has that international reputation. >> and up until last year, the united states was volvo's biggest market. they have seen that decade-long slump in sales. last year, china became volvo's biggest market. up 33%. it is still a swedish-run company. the cars are mostly built in belgium. they are designed by americans in a british-led team. >> that is true globalization. >> they assume the debt from ford. they paid $2 billion in 2010. now they pretty much let the swedish run the company. but now they are going to leverage that reputation they have in the united states. they are going to try to sell the s60-l in the united states
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this year. >> it has the perception of being a swedish company. that is a huge advantage when trying to export to the united states. let's talk about the chinese market. >> shery ahn just went through that. the problem is there are all these license plate restrictions in major cities like beijing. i sold my car last week. when i sold it back to the dealer, they don't really care about the car. they care about the license plate. i've had so many people ask me, can we read the license plate? every month, they line up. 30 months straight, they don't get it. he will want the license plates. i could have rented it to somebody. of course it is my responsibility, so i'm not going to do that. i got rid of it. that was more valuable than the car. let me run through the numbers. overall sales, 18.9 million units, largest in the world,
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that growth is only 10% compared to the previous year. volkswagen, 3.6 7 million. g.m. 3.54 million. ford, up 19%. these are above industry average. although, up 33%. >> a lot of people go to these car shows because they want to see the models. >> what is happening basically is, shanghai auto show -- they alternate between shanghai and beijing -- this has happened in the past. there's been crackdowns on the level of dress, if you will, or lack thereof. some of the smaller automakers in china, they need to really be noticed. you would see sometimes girls out there -- can i say it on tv? wearing nothing but pasties. it has gotten quite racy.
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there's been crackdowns in the past. every year, they come back. shanghai said, "we want to ensure that the show returns to its original spirit of showcasing auto technology." >> we shall see what happens. >> we shall see what happens. the market usually determines. >> right, steve engle. up next, the top china picks this year. stay with us. this is "on the move." ♪
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>> you are back with "on the move." comments coming through from the south korean president. she is talking about reintegration with the north, saying she is open to talk about this and saying that she is even open to a summit if it would improve relations.
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she has talked about de- nuclearization. this has always been a prerequisite for something of this magnitude to take place. she is saying it is not now a precondition. she is urging a a discussion on summit sanctions. we've got 1700 delegates attending the china conference in shanghai. our next guest is among those delegates. joining us is chen li. thank you very much indeed for joining us. we have seen a shanghai market which has been -- to say it has been exuberant would be an understatement. does that continue through the course of this year? >> i think in short-term, upside will be limited. it is too fast and too much.
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if the earnings -- after three or six months, we might say the bull run continues after a short correction. >> i think you are at the moment favoring small caps, are you not? we've been doing a story about retail investors being interested in penny stocks. how does this play out in your view? >> i think small caps will underperform the benchmark. we are having -- [indiscernible] they want reform in terms of ipo, which means they will give much more small caps to the market. that will bring a big crashed a small caps. on the other hand, if the economy grows this year earnings growth will pick up again. i think big caps will continue to outperform small caps.
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that is basically this year in the market. >> chen, talk to me about your readthrough for the chinese economy right now. how are things doing? and indeed, this crackdown on corruption and extravagance how is that making itself felt in your view? >> well, in short-term, in a quarter or two quarters, if you look at -- in november or december, the government has done something similar to the market. also, you look at the investment. it is much more than before. so i strongly believe that maybe in the end of q1 or early q2, we might see growth improve and that will be very strong for
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asian markets. >> i noticed also in your research report that you were talking about the slump of the ruble and its effect on the overall chinese market. are you seeing that? i think you are talking about shrinking demand from banks. >> yes. in the past, china always buys marvel oil -- more oil. the oil price collapsed. basically, most of asian companies are manufacturing companies. there will be benefit from these collapse of commodity price. that's true. >> absolutely. because of the ruble's decline as well. what do you see in terms of monetary policy?
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when do you expect that to happen? >> i think if the u.s. dollar continue to be strong this year, maybe written in the -- maybe that will generate some outflows of the funds. to deal with the outflow of the funds, they might consider to cut rrr to deal with that. i think there will be more times of rrr cut to deal with the outflow of funds and the deflation. >> thank you very much indeed for that. chen li from ubs, the china conference taking place in shanghai. coming up next, prime minister narendra modi's drive for change seems to be working when it comes to corporate india. we have the details. "on the move" is back in a
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couple minutes. ♪
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>> you are watching "on the move " live from hong kong. india enjoyed something of an image makeover last year, with the business is upgraded at the fastest rate in five years. that urges the prime minister to continue his drive to open up and revive the economy. we might call it the modi dividend. >> the modi effect. >> the prospect of change as well. >> you have seen this kind of stable macro environment. you have commodity prices softening as well as a pickup in demand showing that in terms of equities and business sentiment, definitely heading to a very strong spot. we've seen the most upgrades already. construction
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telecommunications pharmaceuticals, let's bring in the numbers. the upgrade to downgrade ratio. 170 local borrowers last year. compare that to 539 people that they cut ratings. company wise, the s&p unit upgraded 740. they downgraded 451. they are turning the ratio bullish for the first time in 30 months in terms of the companies. let's look at the equities too. the sensex on the rise. 57 percent, compare that to the emerging markets. it is leading the msci index right now. compare that to emerging markets. let's take a listen at the prime minister real quick. >> [inaudible]
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let us join hands. let us work together. >> we really haven't seen modi really revive this economy. >> he has a lot of red tape. >> that is for sure right now. the one thing they've seen is the coal mining sector interior rating in credit quality. that is despite modi trying to clear some environmental issues streamlining regulations to make it easier to do business in india. $200 billion worth of projects still backlogged right now. >> thank you very much that yvonne man with the latest on the indian prime minister's efforts to garner foreign direct investment. indian futures, the nifty closing up friday. at the moment, the futures
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lower. we are expecting a flat start to the day. in the next hour of the program heading to colombo to discuss sri lanka under a new president. ♪
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>> hello, everybody. i am rishaad live from hong kong. this is "on the move." a corporate shakeup has hutchison rallying the most in years. adding billions to the net worth of hong kong's richest man, li ka-shing. nukes on the agenda. the south korean president calls for talks with the north. let's get started with john dawson. we've had another soaring
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start to the lake for the li ka-shing empire. >> the $24 billion -- takeover or swallowing up of hutchison went ahampoa, that will be incorporated in the cayman islands. shares rallied on friday. rallying today. the best-performing stock in asia today. it actually rose by as much as 18%. ubs, before the markets opened, added both these stocks to its hong kong most preferred list. clearly, the empire -- [indiscernible] you also have hutchison port in singapore. let's talk about these two companies. cheung kong holdings and hutchison. you can see how far it rose at the beginning. there, it went up by 18% for
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cheung kong holdings. look at hutchison whampoa rose significantly. certainly a strong performance today for both these companies. how is it playing out? hong kong itself, look at the overall pie chart. hong kong is already clearly up because of these stocks driving up the index itself. australia is falling. you can see consumer goods and financials up by 0.5%. look at this, financial services up 0.25 are sent. real estate up 2%. not rocket science to figure out which company is driving that higher. two stocks are falling, six are rising. cheung kong is up today.
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not because of the somatic story of property, but because of hutchison. final graph, if i can look at the map, across asia -- japan is closed for coming-of-age day. we have hong kong in the league. new zealand and jakarta on the open. you can see, china off of lows backed by almost 1%. hong kong very much in charge thanks to two companies and one man, li ka-shing. >> as john was saying, with those gains, li ka-shing has gotten even richer. zeb is here as well. before we get to li ka-shing tell us a little more detail. this reshuffle, the cayman islands, etc. >> this is a major reshuffling. $24 billion if you want to put a
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cost on it. they will be moving the share structure around to unlock the value of the company and expand in new areas of business. there you see, the press conference in hong kong. li ka-shing under pressure by shareholders to create two new corporations. you have specific focus is for these corporations. one for the property portfolio and the other for assets with operations in 50 countries. we have seen diversification already at cheung kong holdings this year. last year, they purchased some aircraft. 45 planes from ge as it seeks to get into that highly lucrative area of business. this move allows them to do just that. let's listen in to what company executives had to say on friday at the meeting. >> if you have two separate companies side-by-side, both controlled by the li family, and
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any shareholder owning shares in each of the companies will be investing directly together with the chairman. so the interests are aligned. to use some of the words i thye ey say, there's no more concubines. >> [indiscernible] >> that brings us to where he has climbed to number one. overtaking jack ma once more, but how much? >> by 3 billion last time i checked. it might be even more. >> zeb let's get back to this revamp. why was there a need for it? >> pressure from shareholders really to improve transparency at the company. also, the fact that this company has a huge amount of cash. they have the potential to invest in any type of business. they are conservative in how
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they allocate money. that is why you saw them in the fall buying into this aircraft leasing business. we are hearing from the executives that we will see more of this, diversifying the business, putting money to work in smarter ways. that is the expectation. >> we just said how narrow the gap is with jack ma. who else is snapping at their heels? >> we have wang, $25.2 billion right now. not far away from the top guys. >> last time we had jack ma overtake li ka-shing, we had a comment. >> it was very interesting. he told us, i'm nothing but happy when young people from china do well. he was referring to jack ma. i thought that was very interesting. now he is again on the top spot.
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>> thank you very much indeed. right, we've got the south korean leader making noises of conciliation toward the north. raising the possibility of a top level summit with the north. what is the top line? i get it is this all of branch, really. >> hopes for an inter-korean summit are running high. president park geun-hye is saying that de-nuclearization is not a precondition for a summit. of course, it is going against seoul; long-held stances -- seoul's long-held stance that this should be pursued before a dialogue with the north. now, park saying she is open to a summit with north korea if it helps improve relations. she is open to meeting anyone to
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help with unification with the two koreas that have been technically at war for more than half a century. hopes for this inter-korean summit are growing ever since south korea said they are hoping for high-level talks sometime in this month. north korean leader kim jong-un alluded to the fact that they could be possibility for the koreas to meet. hopes are high, but you have to consider the geopolitical situation in asia. china, a key player was heard over this weekend that the top security advisor for president park is visiting china soon for talks with top officials. local media now speculating that they are expected to urge china to do more. another key player here is japan. japan has always been very cautious when it comes to dialogue with north korea, saying they have to resolve the
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issue of japanese citizens being abducted by north korean agents act in the 1970's. they also say the nuclear issue has to be dealt with first. president park geun-hye is saying they need to improve ties with tokyo. >> thanks for that. shery ahn having a look at what south korea's olive branch to the north. let's check up on some other stories this morning. hopes rising that the flight recorders from the crashed air asia plane have been located. search teams say pings from the black boxes have been heard. a large piece of wreckage has been spotted. that is thought to be the main part of the fuselage. all 162 people on board died when the plane quest into the java sea. >> we have detected signals from the black box. the recorder itself has not been found yet. i repeat, the black box has not been found yet. >> more than one million people
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and dozens of world leaders march through paris to remember the victims of the "charlie hebdo" attack. president hollande said paris is a center of the world at the moment. rallies were held elsewhere in france and across europe. the suspected gunmen gave interviews to belgian television before the attack saying they were acting on behalf of al qaeda in yemen. [indiscernible] you can get all the latest world news and top stories as well on our website. it should be your online source for business market news 24/7. bloomberg.com. volvo is poised to become the first major automaker to export chinese made cars in the united states. stephen engle has the background to this groundbreaking plan. chinese-made vehicles have had
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less than a checkered history in this regard. >> i'll believe it when i see it. you've had a number of chinese carmakers they had plans to send cars to america. we had geely the parent of volvo, they had plans to send a sub $10,000 compact to the united states perhaps from plants in mexico. none of those plans came to fruition. volvo wants to do it. >> the thing is, if any companies can do it, it is volvo . >> up until last year, still, the united states was volvo's biggest market. now it is china. china sales up 33% for volvo but in the united states, down 7.9%.
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sales have declined for a decade now. it has a reputation for safety. the new v had the highest safety rating in europe40. they have done ok in that market with the new compact. geely wants to recapture the u.s. market. >> you have brought something along with you. >> full disclosure, i own a volvo. >> that is evidence. how do we move forward on this? the chinese car market is vast biggest car market in the world. >> 18.9 million total vehicles sold in this market. the bigger story is the pace of growth, just 10%. last year, it was 17%. the pace of growth is slowing. it is a more mature market. we are seeing volkswagen up
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12.5% year-over-year. gm ford up 10%. although up 33%. these are beating the market. because of license plate restrictions in china, the pace of growth is starting to slow. >> we have seen the corruption crackdown. >> audi is doing well. >> you have to get the pundits and and one of the way you get the punters into the shanghai auto show it may not be quite as risque as it has been. >> the latest story is the shanghai auto show, they are considering banning these models . in years past, they have gotten racier and racier. i can say it on tv. sometimes the girls are only wearing on the top pasties. >> i don't know what they are. >> they hide the specific parts. only. let me read the statement from
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the auto show. we want to ensure that the show returns to its original spirit of showcasing auto technology and products. we are not ruling out banning car show models. if you are a gearhead, that is the place for you. if you are there for something else, go to a lingerie show. >> steve engle. right, let's talk about what we have next. we are turning our attention to sri lanka. ambitious plans to cut back the power of the president. ♪
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>> you are with "on the move" coming to you live from hong kong. the new sri lankan president is
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expected to name his government soon. maithripala sirisena has a smaller, more open administration and an end to corruption and nepotism. [indiscernible] let's have a look at president service and a's -- president s irisena's to do list. thank you very much for joining us. let's start with the election result, which was a regular surprise. mr. rajapaksa losing. the opposition, service and -- sirisena winning/ . >> there has been a huge governance deficit. the corruption, the family dynastic project, etc. >> indeed, that is perhaps one of the reasons why he was kicked
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out of office, essentially. this is going to be top on mr. siriawsena's to-do list. what do you anticipate he is going to do? >> as you probably know, he's got a plan. the central focus of that plan is the -- of the parts of the executive presidency. that opens the door to corruption and plutocracy. i think the first demonstration of his sincerity is going to come with the implementation of that plan. the plan also promises to bring legislation into sri lanka as well. in a sense, he's got to hit the road running and demonstrate. >> how is he going to deal with international criticism, after the end of the civil war particularly? >> two things, one, he has
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promised that the foreign policy of sri lanka will be a lot more evenhanded. he has suggested that it has become much too dependent on china. secondly, with regard to the solution on human rights issues he has said that while they will not submit to an international inquiry, he will look into credible domestic methods. >> let's pick up on china. just how wedded has sri lanka become to beijing? >> the entire economic infrastructure program of rajapaksa was more or less written by beijing. there were other projects in the past, including the building of an airport, the building of a port, also a project to reclaim land from the sea, huge number of projects, etc. quite dependent in a sense.
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we are probably in debt to the chinese for at least a generation. >> on top of that, that has caused much ire in new delhi, has it not? >> there has been considerable concern, apart from the economics dimension. this is sort of framed in the context of another argument. >> let's talk about the economy. what needs to be done there? a regular guest that we have the central bank governor, he resigned in the afternoon too. what is happening with the economy in your view? >> i think there is a huge challenge. the first point is that the vast majority of people, despite the emphasis on governance, do see problems with the rising cost of living. in order to be able to realize
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any of the ambitious plans that he has, we will need a lot more foreign direct investment if that is going to make any sense at all. >> so you have a window at least, a honeymoon period a hundred-day program that you talked about as well. that is what we have right now. is this man genuinely bringing a genuine change here? >> i certainly think that he's quite genuine and sincere. i think the challenge is now going to the in terms of management of the coalition of forces that has brought him to power. >> up next five years after haiti's devastating earthquake one of fashions famous names is helping the recovery. we are going to hear from donna karan after this short break. ♪
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>> five years after haiti was devastated by a powerful earthquake, the nation is still struggling to get back on its feet. it takes more than just bricks and mortar to rebuild a nation. new york fashion designer donna karan is showing people how to exploit their creative potential. >> donna karan, the new york fashion designer credited with revolutionizing womenswear in
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the 1980's, may seem an unlikely spokesperson for haiti. but karan has been developing talent in haiti since just after the devastating 2010 earthquake. >> i needed to get involved in showing haiti in a way that it is special. i worked with the haitian designers. i developed designs with them. i showed them to the public, getting them interested in it. >> through her foundation, urban zen, karan helps artists reach the global marketplace. >> who is making this? >> we work with a lot of women but i'm not discarding the men. giving a man the fishing pole is just as important as the women. >> karan has worked with 200 craftsmen and women who make everything from wrought iron chandeliers to necklaces from cereal boxes. >> these are recycled cereal
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boxes. >> i thought they were shells. >> in 2011, karan began working with paula cole. >> cole creates handbags using t-shirt scraps. >> the bags are handmade. >> karan's urban zen cells coles bags. the bags will retail for about $200. >> it is not going to go on markdown in the retail stores. in the retail world, you could be in one season, out the next. that is not what could happen to haiti. you do that, we are over? >> how hard is it for you to get these products out of that island and on to our shores? >> not hard. not hard at all. that has not been my problem. >> doing business in haiti has its challenges. much of the workforce lacks education and electricity is
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unreliable and expensive. but that doesn't discourage karan. >> you know the bumps in the road? those are bumps in the road. we hit them. we are not giving up on haiti. >> of course, you can get more on that and all the days top stories, plus watch us live wherever you are. just have the bloomberg app. download that to your mobile device. going to take a break, but coming up, we are having a look at search teams as they find the air asia black boxes. it takes us a step closer to finding out what caused the crash. we are going to head over live to jakarta next. ♪
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>> back on top in asia. the shake up gives him number one again. >> upgrade india. companies given a lift as moody's said it is the best place to do business. and clues to the air asia crash. the vital black boxes have been found. right. well asia's crash remains one of the top stories with the flight rodders being
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established. nina is there. a very good day to you. we are a step close tore knowing what happened, -- closer to knowing what happened aren't we? >> yes. it is a big step. the agency has confirmed the location of the black box of the air asia flight that crashed around five kilometers from where they found the tail of the plane. here is what the head said. >> we can confirm that we have detected ping signals from the black box. but the recorder itself has not been found yet. i repeat the black box has not been found yet. >> vessels involved in the search have detected pings from the black box under debris in
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30 meters. strong winds have been hampering the search operation. today, three vessels will be dispatched to retrieve the black box. until sunday evening, 148 bodies of the 162 passengers on the flight have been found in the sea. >> what does this tell us about what has been happening in the aviation industry in indonesia? there have been improvements, but what other question marks have been raised? >> well, this incident has clearly highlighted enormous things. we know that arias flight took off december 28 without the transport minister to fly that day. the government has suspended the license to air asia for that route and the state airport company. the transport ministry found
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other airlines in breach of 61 flight rules. five airlines have issues, and the government that is suspended licenses for them. they say the crash may involve several. there is an investigation involving the possible corruption on the air asia bridge. >> thank you. now the korean president has held her annual news press conference this morning. the president was addressing a domestic audience and alleys and rivals. they would seek a new engine of growth. she said pyongyang should resume cross frontier family reunions. she discussed the possibility of a summit with pyongyang saying the north's nuclear
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program would not be a precondition. here is what we came up. >> the two koreas have technically been at war since 1953. but let's imagine they put their issues aside and pursue unification. how much would it cost to put the two halfs back together? let's lock at the most recent comparable transaction. the east and west germany. the bill cost the u.s. about $2 trillion. that is where the problem lies when we consider the two koreas. the lack of reliable information. we just don't know a whole lot about the north. pyongyang hasn't released official g.d.p. data since 1965. the best estimate perhaps is from the south korean central bank which puts its northern neighbor's economy at about $30 million, making the south about
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50 times larger. back on point. how much would it cost? just to show you how much in the dark everybody is, estimates range from $50 billion to more than $3 trillion. a financial services commission put up an estimate of $500 billion over 20 years following the hand shake. he is a bit embarrassed about how unreliable their calculations are. while we can barely make a ref estimate so far, we do know it won't be cheap or simple. south korea's 50 million people enjoy one of the world's highest living standards. while many of the north's 24 million suffer from malnutrition and an all-powerful oppressive state. the two countries are actually hugely complimentary. south korea's president park described it as an economic bonanza. imagine what you would get if you combine the capital and
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technological skills of the south and the labor from the north. on paper it is a great idea. then again until we have a locality more light from the north star, all this is at best simply a guestimate. >> also coming out of korea today, we had years of delay coming saying they are finally launching a new carbon trading system. they are looking to curb greenhouse gas levels by 30%. >> we know training started an hour ago. 525 companies participating. they have a quota of 1.6 billion korean allowance units. one unit is worth wonton of carbon dioxide gas. south korea finally one of those more than 30 countries with a market-based environment, including numbers of the e.u. new zealand and
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switzerland. korea won developing country status, which means it is not under any obligation to set emissions targets. but the former administration made green growth a key strategy in his political platform. now you have the current add minute stration pushing through. >> how does this traiting system work? >> it is simple. you get the training service done at the korean exchange. they train from 10:00 a.m. to noon. the government sets the initial price, but they hope to stay around $9 to $10 per unit. they say the trading objective here is not to boost the financial market but to reduce the country's emission of air plutko ants. the things will be adjusted depending on how it goes over
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the next three months. you can see the companies joining this. these individual companies have not been made public but an environment official telling me the quotas could be expanded for these individual companies by about 10% depending on how trade goes. >> this has been a long time in coming hasn't it? long overdue this whole system. three years or something like that. why the delay? >> as you would expect, a lot of businesses have been opposed to the scheme. they say this will place a heavy burden on them. officials pushed through and went ahead and launched this morning. now they are saying it is just the beginning phase. up until 2017 companies under the emission target will stephanie carbon allowances for free. >> thank you very much.
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it is coming into force there in south korea. market-wise it is a public holiday. no trading in tokyo today, but it is business as usual elsewhere. john? >> i want to focus again on the biggest market of the day. these stocks rallied on friday in new york. you can see from this charpt that hutchinson twhampoa rows as high as 18% at the open. off that high now but steady now at 12.a%. it is now down to shall%. i would remind you that u.b.s. added both these stocks to their hong kong preferred list before trading began this morning. as you can see from this chart
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you can see exactly where they are right now. hutcheson ton is unchanged. if you like empire, these two are very much in play as you would expect them to be. those are the biggest market stories of the day. the dropping of the hang seng before coming of age day. the rest of the market apart from new zealand are led by declines. all these commodities and resources are falling. china down by a%. the top three, cheong coverage ng holds.
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malaysia singapore and jakarta all in deadline. twain is higher. if i can get australia to show you what is happening there as regard to declines on this monday morning of week two of 2015 if the thing works, which is doesn't. maybe it will work now. there it is. australia from this chart, lots of read. financials, tech consumer goods down. oil and gas down 2%. these are falling the most in australia. you have oil and gas down 2.a%. it is a very resource-heavy economy. senex energy is down. bochy energy down 3.a%. horizon oil down.
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they are all drillers. you see the declines. that is significant. and basic materials falling. australia and china dragged down by this resource deadline in the last few hours. >> thanks, john. let's have a look at the latest coming out of the air asia plane disaster. indonesia officials are saying they have found the black box data recorder. they are trying to locate the cockpit voice recorder as well. it does seem like they are recovering those black boxes. that is the infernos coming through here. as we get more, we will bring it to you. let's have a look at the stories we are tracking this week. on wednesday, hong kong chief executive giving his annual policy address. his election sparked two months of protests.
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millions of people are going to pack the streets of manila when the pope visits on thursday. it is asia's only catholic country. they hosted a papal visit to years ago. john paul ii went there twice. a flag ship is being released. all is going to be revealed by the chief executive late june. a long simmering pay dispute goes to court. unions have threatened more action. the district court will announce its verdict on a settlement. here is a look at key events for the united states this week. su keenan wraps it up. >> the big question in the week ahead on wall street will we see a break in the volatility, and will we see a return to a
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rebound in the stock market? which got off to the worst start, at least for the s&p 500, since 2009. a quote from one fund manager the laundry list of investor worries have been reasserting itself. we have global concerns, and how the central banks respond is another. reports investor will be focused on. retail sales data, which probably cooled in december, and the federal reserve's beige book which provides a snapshot of the economy in certain regions. on monday earnings season kicks off unofficially with the after the bell earnings of alcoa. other big names scheduled to report throughout the week, j.p. morgan chase, bank of america, citigroup and goldman sachs. in new york, su keenan, bloomberg news. >> coming up, up grades in india, we are looking it how the prime minister's moves are
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paying off for companies when "on the move" returns.
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>> on the move, i am rishaad salamat. we have a look at the effect on indian companies. first a look at some of those corporate stories we are tracking for you. >> on monday, january 12, these are the top stories. these companies are rallying in hong kong after a major revamp announcement. these two companies soared the much, and that will push li up to the top of asia's rich list. made in china and bound for the u.s. that is what volvo is planning on becoming the first major automaker to build cars as a chinese operation and export them later to the states later this year.
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they are both in 2010 and opened its first london area two years ago. volvo hags assembly lines in sweden and belgium. the new sri lanka president is expected to name his government soon. he has promised a smaller, more open administration and an end to corruption and nepotism. he leads a desperate political group including free market capitalists, hard-line buddhists, and left-wing thinkers and muslims. those are the top stories. i am in singapore. >> now india has enjoyed something of an image make over with businesses upgraded to fastest rate in a year. we have been looking into this. we have been talking about this earlier and it seems we have something we have called the moody dividend. >> yes. we are starting to see a lot of
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business sentiment improve quite a bit in the last couple of months. they are receiving the most up grades. we have telecommunications, construction, automobiles as well as pharmaceuticals. and moody's really doing quite a bit of up grades here. let's take a look at the numbers quickly in terms of local borrowers. they upgraded 170 borrowers. that is the best upgrade to down grade ratio since 1979. the ratio is bullish for the first time in 30 months. let's take a look at the equities quickly as well. india's bench markets sensex seen to rise there 56% in the last five years. compared to the emerging markets, you are seeing growth leading the way and expected to
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go up an average of 27% over the next 12 months. but again it is thanks to moody's efforts of spurring for an investment, trying to eliminate the red tape we have seen there. g.d.p. growth also rising. we have seen 5.3% in the third quarter, up from 5.7% in the second quarter. this year they are expecting 6.5% in the next year. >> we are getting a look at this moody dividend. thank you. up next, the u.b.s. up grading his growth forecast for the year. we are going to talk to the chairman. we are asking him why they are so optimistic. that is coming up next.
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>> u.b.s. is holding its china conference in shanghai today. joining us there is the chairman of the bank himself.
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he is a former member of the e.c.b. governing council. thank you very much for joining us. >> good evening. >> you have upgraded your view on this. you have become optimistic. what prompted you? >> well, the u.s. growth is not just a question whether it is robust. it is almost unique among the developed countries. the uses has come out of the crisis in a lead position again. growth has led, and we expected that to continue. u.s. may raise rates around mid year. i think this will likely happen. i think a let of the action that is priced in after that is largely data fed. there has been a strong deadline in oil prices. we are more optimistic.
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the oil price coming down is a major boost to the u.s. consumer. that warrants our up great of the economy forecast. >> let's talk about the oil price now. is it sustainable at these lower levels? do you see a further down side? what does it mean for the global economy? it is like a massive tax cut or an interest rate cut. >> it is a major boost for income and in particular oil consuming and importing countries. it may rebound a bit from current lows below 50. we are in the process of revising down our forecast for oil. they are still stuck at something like 90, and it is unlikely to rebound to that level. oil is substantially lower than it was over the last years. that is a sustained performance increase for consumer demand. therefore, we expect to benefit the u.s. economy, but then also other economies that are energy
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dependent. the second effect unfortunately to consider, there is always the currency i mentioned as well, and there we have had a major appreciation of the u.s. dollar over the last 12 months. that will make other countries more competitive on international markets. europe and asia in particular will benefit from that. so by and large there is a support of consumption and there is a support of export for many of the economies that are currently in a weak cyclical position like europe. that should be welcomed by the global economy because it will help regain dynamics in europe. it will help to regain global trade dynamics and there fore, our outlook for the global economy going forward is improving year by year. >> let's talk about europe. a lower oil price does not necessarily help europe as much as it will the united states given the amount of tax that is actually put on fuel there. the thing is we have got a lot
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of pressure on the e.c.b. president to do something to revive what really is a big leaguered -- beleaguered economy. is there anything he can do? >> i think he can both do it, and he will announce some action on the 22nd. i think the recent oil price has given a lot of pressure in europe to consumer price inflation falling very, very low. it is way below the target, and the e.c.b. has already indicated they would do something. they will is not postpone that. i don't think it will just be a government bond purchase program. it will be a mix of issues. it will be sovereign debt corporate bonds, and there may be some conditionality on buying the higher graded government bonds, which might exclude some countries. >> thank you for that.
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stay with us. more coming up with the chairman of u.b.s. joining us from shanghai again after this break. they will be joining us in this edition of asia edge coming your way. ♪
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>> it is the middle of the asian trading day. we are live in hong kong. this is a view of victoria harbour and you are watching "asia edge." the new number one, li ka-shing is back at the top of the rich list in asia. it is all down to his flagship companies cheung kong seeing the biggest rally in years. are the american drivers ready for made in china? volvo is about to test the
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waters. >> of great india. companies are given a ratings list as modi says it will be the best place to do business. it is time to talk. the korean leader calls for a summit with the north, saying its nuclear program would not be a precondition to look at the cost of potential unification. and, appetite for change in sri lanka. the new president thomas is open government and may name his cabinet today. all that and more in this monday edition of "asia edge." >> i'm john dawson. the markets today up. fairly mixed, but more or less the reason hong kong is rising is hutchison whampoa and cheung kong holdings are both seeing significant gains. about 18% each. li ka-shing driving the two. the rest are seeing declines. resource stocks, australia,
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